Federal Reserve stays put, says uncertainty around economic outlook "elevated"
By Alexander Bueso
Date: Wednesday 30 Jul 2025
(Sharecast News) - The US central bank kept policy unchanged at its meeting on Wednesday and sounded a largely neutral tone.
On the one hand, the economy had "moderated" over the first half of the year, whilst on the other the jobs market remained "solid" and inflation "somewhat elevated", the Federal Reserve said in its policy statement.
Uncertainty around the economic outlook also remained "elevated", the Fed said, and the Federal Open Market Committee was keeping risks both to the upside and downside in mind.
Of interest, during his post-meeting press conference, Fed chairman, Jerome Powell, noted how the unemployment rate was remaining low both as a result of a decreased supply of labour - due to immigration policies - as well as lower demand.
That, Powell said, pointed to certain downside risks.
Two Fed governors dissented from Wednesday's decision to keep the target range for the Fed funds rate at 4.25-4.50% - for the first time since 1993.
Michele Bowman and Christopher Waller, both of whom had been nominated by President Trump, voted for a quarter point reduction.
"While dissents often precede subsequent action, the clear majority prefer to hold rates steady amid the uncertainty around inflation and a solid labor market," said Nancy Vanden Houten, lead US economist at Oxford Economics.
"We expect that will remain the case until late this year.
"[...] While a range of policy rules suggest the Fed should be cutting interest rates this year, we think the uncertainty and balance of risks will push the majority of the committee to remain in wait-and-see mode at least a few months longer, with the next rate cut not coming until December."
In remarks to Bloomberg TV, former NY Fed boss, William Dudley, downplayed talk of a 'schism' at the FOMC, arguing that differences among members ware a question of the appropriate timing of rate cuts.
Dudley also highlighted just how novel the current economic situation was, which argued for caution.
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